MERSEYSIDE will lose out on tens of millions of pounds unless Halton agrees to become part of a 'super city' with a population of more than 1.6m.

Under radical plans unveiled by the Government the Merseyside authorities will be invited to form a City Development Company (CDC), with the power to sell bonds to investors.

Ministers say the power, currently available only to Transport for London, would raise tens of millions of pounds without the need for Government approval - and that would give the Mersey authorities the funds to instigate projects such as the Merseytram scheme that was scrapped last year.

The freedom to raise money by issuing bonds will only be handed to England's biggest cities who form a city region by joining forces with neighbouring authorities. That would mean Liverpool jointly governing with Wirral, Sefton, Knowsley, St Helens and Halton.

But, crucially, ministers are no longer insisting on a directly-elected mayor, agreeing instead to an executive board, electing its own leader.

That makes it far more likely the plan will be acceptable to Liverpool City Council, whose Liberal Democrat leader Warren Bradley is implacably imposed to an elected mayor.

Local Government Minister Phil Woolas said: 'This is a way for our big cities to raise money in a way they are not currently able to do.

'If, for example, Merseyside wants to build a light rail scheme or a new container port it could create a company and issue bonds to investors.'

The idea is part of a White Paper on local government reform.

However, Halton's leaders have pledged that the borough will not merge with Liverpool.

Leader Tony McDermott said: 'Halton council has no proposals to amalgamate with any other authority or authorities. Halton believes local people come first and we will continue to focus most of our efforts on local issues.'